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Why the AuMake share price surged 28% higher today

The Motley Fool logo The Motley Fool 5/06/2020 Cathryn Goh
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The Aumake International Ltd (ASX: AU8) share price is zooming higher today after the company announced it now offers leading Chinese-owned buy now, pay later (BNPL) services via its in-store and online channels.

AuMake is a specialist retailer that caters for Asian tourists and daigou personal shoppers in Australia and New Zealand. The company has a multichannel distribution network, selling Australian and New Zealand products online via owned and third-party channels, and through brick and mortar stores.

The company operates 15 stores under the AuMake and Broadway brands, located along the east coast of Australia and in New Zealand. These stores primarily cater to organised tour groups. The types of products on offer include skincare, health supplements, wool, honey and clothing.

Before we dig into the announcement, it’s important to note that AuMake sits at the very small end of the ASX with a current market capitalisation of around $21 million. At the time of writing, the AuMake share price is sitting 10.34% higher for the day at 6.4 cents after rallying as much as 27.59% in early morning trade.

What did AuMake announce?

This morning, AuMake revealed that it now supports BNPL services for its in-store customers and 40,000-strong online database.

Accordingly, AuMake’s customers will be able to use Alipay’s “Huabei” feature and Tencent’s “Fenfu” feature to make purchases.

Alipay is one of the most popular online payment solutions in China and falls under the umbrella of Chinese multinational giant Alibaba.

Huabei allows purchases made via the Alipay wallet to be paid using credit facilitates, including interest-free or daily incurring interest loans. According to AuMake’s announcement, Huabei has more than 190 million users, with 93% of them being under the age of 35.

Meanwhile, rival conglomerate Tencent is reportedly in the final stages of developing its Fenfu BNPL credit feature. Fenfu will offer similar credit facilities to Huabei that can be used by its 1.1 billion customer base.

Tencent recently made headlines in the ASX BNPL space after news broke that it had acquired a 5% stake in market darling Afterpay Ltd (ASX: APT).

AuMake believes the adoption of these BNPL payment methods will assist the company to penetrate a younger Asian customer demographic. The retailer concluded today’s announcement by stating it will continue to assess initiatives that provide a contemporary shopping experience for its customers.

According to Market Index, the 4-week average turnover of AuMake shares currently sits at only $26,821. So if you’d rather invest in larger and more liquid companies, the top ASX shares in the free report below might be more up your alley.

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As of 2/6/2020

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Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the AuMake share price surged 28% higher today appeared first on Motley Fool Australia.

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